Paris Officials Begin Raiding Airbnb Rentals for Housing Violations

The lure of an Airbnb-style rental in Paris is strong — who hasn’t wanted a charming apartment in a good arrondissement? Problem is, locals would like to be able to afford that too.

— Jason Clampet

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The world’s most visited city is stepping up its crackdown on illegal vacation rentals.

As in New York and Barcelona, officials in Paris say companies such as Airbnb Inc. have spawned a cottage industry of scofflaw landlords who are cheating citizens out of housing and depriving localities of much-needed revenue from the growth in international travel.

Paris Mayor Anne Hidalgo has a 20-person team making unannounced visits to apartments whose owners are suspected of, or turned in by nosy neighbors for, unlawfully renting to visitors. Her office also is considering a tax on such person-to-person transactions, expanding a levy of as much as 1.50 euros ($2) a night hotel guests already pay.

Paris’s fight against the expanding business is the latest attempt to curb a development housing advocates say drives up residential rents. They rose 42 percent in the decade to 2013, according to government-funded research.

In New York, Airbnb, the short-term room rental service for travelers, complied with a state probe to provide data on its hosts, with personally identifiable information removed. Catalonia, the home region of Barcelona, fined the company for failing to register rentals with the provincial tourism authority. In the U.K., the hotel-industry association said unregulated rentals put visitors’ health and security at risk.

Paris Competition

San Francisco-based Airbnb, whose last fund-raising round valued it at $10 billion, says it’s the biggest rental service in Paris with about 25,000 postings this year, or 83 percent of the total. Sejourning.com, a French site with 2,000 listings in Paris, caters mainly to short-term domestic travelers and isn’t concerned about illegal vacation rentals, founder Francois de Landes said.

Airbnb says it contributes to local economies in part by attracting travelers who might not stay at hotels.

“We are not in charge of tourism or housing in Paris,” said Emmanuelle Flahault-Franc, Airbnb’s spokeswoman in Paris. “Airbnb helps fill the gap left by the lodging shortage.”

Economic Impact

She says 1 million visitors have used its service in France since 2008, half of them in 2013 alone; usage is up 176 percent this year from last. France is Airbnb’s second biggest market after the U.S., and Europe represents half the company’s sales, according to Airbnb. The company, which is closely held, declined to give sales figures.

Airbnb says it had an economic impact on Paris of 185 millions euros and created 1,100 jobs between mid-2012 and mid-2013. In Barcelona, its No. 4 market after New York, Paris and London, the impact was 125 million euros, Flahault-Franc said.

For the world’s major tourist hubs, getting control of holiday rentals is also key to collecting more taxes.

The room tax under consideration in Paris for private-home vacation rentals would follow a February law allowing city inspectors to check inside rental homes.

Hidalgo’s squad made 400 inspections last year and is accelerating this year. Five landlords were fined in 2013, each 25,000 euros. In the first six months of 2014, the city fined 10 landlords and another 13 are under investigation, according to Brossat’s office.

Hotel Industry

Hidalgo has the backing of the hotel industry, which sees Airbnb chipping away its business territory through what it calls unfair competition. Tourism generated 7.3 percent of the French gross domestic product in 2012 and foreign tourists spent 42 billion euros that year, according to the government.

The French capital has more than 80,000 hotel rooms, according to the Paris Tourism Office. That’s slightly less than London and New York City, which each host more than 100,000 bedrooms according to the Great Authority of London and New York’s official tourism organization.

France is the most visited country globally before the U.S., China and Spain, with 83 million tourists, according to the World Tourism Organization.

Hidalgo made affordable housing for local residents the priority for her six-year term. The crackdown on tourist rentals is one side of her work.

“It’s simple math: A studio on Airbnb can be 1,000 euros a week. That’s four times the price usually paid by a Parisian,” Brossat said. “We’re fighting to keep the middle class in town, they are the heartbeat of the city.”

–With assistance from Mark Deen in Paris.

To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net; Ania Nussbaum in Paris at anussbaum5@bloomberg.net. To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net.